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AIG Back in the Mortgage Business

This could get ugly. In a stark reversal of “no second acts in American lives,” AIG announced on Wednesday it’s decided to rejoin the mortgage world.

The insurance and investment giant said it had launched a new business unit called Connective Mortgage Advisory Co. The new company, which recently made its first correspondent mortgage purchase, “draws upon AIG’s investment expertise and the experience of its mortgage insurance subsidiary, United Guaranty Corp., to identify and buy residential whole loan mortgages as investments.”

The company notes “all purchases will be subject to rigorous underwriting and risk management standards,” and there no plans for Connective to conduct any direct lending or securitization.

Connective is focused on identifying residential first-mortgage loans to be purchased as long-term investments for AIG. For loans purchased as investments, AIG will manage the loan-servicing component.

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